A major pharmaceutical company is moving its tax domicile to Ireland because the U.K.’s corporate tax systems is too burdensome. This story from the Guardian is a great example of tax competition, of course, but it also highlights the fact that governments are only subject to competitive pressure if taxpayers have the freedom to shift economic activity to jurisdictions with better tax law - and they have the ability to benefit from those better laws. Sadly, American companies no longer have this freedom thanks to “anti-expatriation” or “anti-inversion” laws enacted by greedy politicians:
Shire, the country’s third biggest drugmaker, has intensified the debate over Britain’s corporate tax regime with plans to move its tax base to Ireland from the UK. The FTSE-100 company said it was applying to a court to create a new holding company incorporated in tax-haven Jersey and would become tax resident in Ireland, where corporate tax rates are less than half those in the UK. …its board of directors will hold meetings in its Dublin office once the tax residence move gets court approval. Most importantly, the move means it will be subject to an official corporate tax rate of 12.5%, compared with 28% in the UK. …Business lobby group the CBI said Shire’s decision deepened its concerns about the UK corporate tax system. “We are particularly worried that an uncompetitive corporate tax system is spoiling the UK’s attractiveness as a place to do business, and that other internationally-mobile firms will follow Shire’s path,” said CBI director-general Richard Lambert. Last month, technology giant Yahoo announced it was moving its European headquarters from London to Switzerland to increase competitiveness and deliver “efficiencies”. A recent survey by accountancy firm KPMG blamed complex rules and a mass of legislation for putting the UK in the bottom half of a league table of the most attractive places to do business in Europe. The study ranked Cyprus, Ireland and Switzerland top for their combination of easy-to-understand rules, low tax rates and stable fiscal laws. The UK came 12th out of 22 countries for the attractiveness of their domestic tax regimes.